In Norway, Law Promotes Women In Boardroom

In Norway, gender diversity in the boardroom isn't just a nice idea, it's the law: The boards of all publicly traded and public limited companies in Norway must have at least 40 percent female representation.

Companies that fail to comply can, in theory, be shut down. So far, all are complying and none has been closed. But there is sharp disagreement in Norway over whether quotas have really changed the status quo.

In 2002, barely 6 percent of Norway's corporate directors were female, and 70 percent of the top companies in the country didn't have a single woman on their executive boards.

As a result, the Norwegian parliament took action in 2003; companies had until the end of 2008 to comply. The law affects about 460 Norwegian companies.

Kristin Holth, a bank executive, says the government needed to step in.

"Otherwise, it would have taken [such] a long time to come up to the number. If 40 [percent] is right or not, I don't know. But the point is to get more diversity on the board, female or not. It is the diversity which I think is very good," Holth says.

Bringing Different Perspectives To The Boardroom

But there are questions as to whether the law has really made a difference by changing the culture at board meetings or improving corporate governance. Holth thinks it has made a difference, but the change has been subtle, hard to quantify and largely anecdotal.

Holth, a vice president at DNB Nor, Norway's largest bank, says perhaps women are more likely to ask nontraditional or unorthodox questions in board meetings and more readily admit when they don't know an answer. She says women generally promote a less testosterone-fueled way of running a company.

"Maybe females take a less aggressive approach. So you might see more, not necessarily conservative, but less aggressive attitudes in companies, which might be a good thing in the climate we're in now," Holth says.

Gender diversity has led to the downfall of at least one old boys' club: Several new female board members at Statoil, Norway's largest company, called an extra board meeting about a corruption investigation and demanded answers. Their actions led to the resignations of Statoil's chairman and its chief executive in 2003.

Anne-Grete Ellingsen, a senior official at an energy company in Kristiansand in Norway's south, sits on the boards of several Norwegian corporations. She says the gender diversity law is in some ways an extension of Norwegian culture.

"From the Viking time, the females had to take a lot of responsibility when the Vikings went away. We have a tradition for that," she says.

Some Say Progress Is Questionable

But the tradition of Scandinavian skepticism abounds as well.

While few in Norway want to go back to the status quo, many are questioning whether the state can really mandate corporate diversity.

Economist Knut Anton Mork says that perhaps ethnic diversity or more international representation would have made a bigger difference on boards.

"Frankly, I can't see any difference in the type of decisions that have been made after this rule has been changed," Mork says.

But his larger critique is that too many talented female business leaders are now spending most of their time in board meetings — with some women sitting on up to a dozen different boards. The law has spawned a growing class of what might be considered professional board sitters, which some in Norway have nicknamed "the Golden Skirts."

"They could have been filling very good and important managerial positions. Instead, they are sitting on boards," Mork says.

Some Norwegian businesswomen agree. But they say corporations have been choosing from only a limited pool of female candidates and need to expand the talent pool. Ellingsen sits on five boards, in addition to her job as a director at Agder Energi, one of Norway's largest energy companies.

"To do a very professional board job, you need to have quite a varied and long experience in management. Some of these women do not have that. They've been on board only; they quit their jobs and do only that. I'm a bit [skeptical of] that," she says.

Even some of the women who worked hardest for the law also have concerns about how it's working — or not.

More Room For Diversification

Marit Hoel, of Norway's Center for Corporate Diversity, says the law has done nothing so far to boost women into the top ranks of corporate management, contrary to what she had hoped would happen.

"I am a bit worried about this. As I review the numbers for executive leaders, it has practically not improved in top management during the last five years. We have an enormous lack of women in executive leadership," she says.

But she adds that even though the quota law doesn't apply to them, Norway's many private companies have dramatically increased female representation on corporate boards.

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